The Bangko Sentral ng Pilipinas (BSP) has generated P70 billion from its weekly auction of its own securities.
Data from the central bank showed on Friday that its offer of P80-billion securities was 1.7 times oversubscribed after attracting bids worth P120.55 billion.
The Bangko Sentral fully awarded P70 billion worth of one-month BSP bills. This resulted in a weighted average interest rate of 2.0367 percent, 0.94 basis points higher than last week’s rate.
The accepted yields were narrower at 1.990-2.075 percent. The bills will mature on December 1.
BSP Deputy Governor Francisco Dakila Jr. said in a statement that the auction results showed that liquidity in the financial system remained sufficient.
“Moving forward, the BSP monetary operations will remain guided by its assessment of market developments and liquidity conditions,” he added.
The Bangko Sentral’s authority to issue negotiable certificates of indebtedness, even in normal times, was restored by Republic Act (RA) 11211. Signed into law in February 2019, RA 11211 amended RA 7653, or the “New Central Bank Act of 1993.”
Before the amendment, its debt offerings were only allowed in cases of extraordinary price movements.
BSP Governor Benjamin Diokno has said including the issuance of securities in the central bank’s standard monetary operations provided an additional tool for implementing monetary policy.
“This also promotes greater flexibility in managing liquidity in the financial system under the interest rate corridor framework,” he added.
Offering these securities will be useful for absorbing excess financial system liquidity that is structural in nature, according to Diokno.
Latest data showed that the country’s money supply, or domestic liquidity (M3), rose by 14.2 percent year-on-year to P13.6 trillion in August, slower than the 14.7 percent in July. Month-on-month and seasonally adjusted, M3 was up 0.1 percent.
Diokno said issuing securities would help monetary authorities in guiding market interest rates along the short end of the yield curve.
“This strengthens the transmission of the BSP’s monetary policy stance to the rest of the economy,” he added.